Tax Break of a Lifetime: Bonus Depreciation Goes Permanent
Min 1
Bonus depreciation lets real estate investors accelerate tax deductions by writing off eligible assets in the same year they’re placed in service, rather than over several decades. Historically, bonus rates dropped from 100% after the original law, down to 40% by 2025—but that’s no longer the case.
Min 2
Thanks to recent legislation nicknamed the “One Big Beautiful Bill,” 100% bonus depreciation is now permanent for properties placed in service after January 19, 2025. That restores the full deduction investors enjoyed under older tax rules, offering solid clarity and consistency for real estate planning.
Min 3
How big is this tax benefit? Consider a $5 million commercial property with $2 million in qualifying components: under the old 40% rules, you’d deduct $800,000 in year one. Now you can deduct the full $2 million—translating to hundreds of thousands in additional tax savings and much-needed upfront cash flow.
Min 4
Cost segregation studies become extremely powerful under the new rules. By breaking a property into smaller components—like carpeting, fixtures, landscaping, or electrical systems—investors can accelerate deductions on those items immediately. With bonus depreciation at 100%, the ROI on these studies just skyrocketed.
Min 5
From an investor’s point of view, the change rewrites the playbook. Timing acquisitions and renovations to fall after January 19, 2025 unlocks full deduction potential. Investors should work with tax professionals to revisit existing portfolios, consider look-back segregation studies, and strategically plan upgrades to benefit from this permanent advantage.
Final Takeaway
Making 100% bonus depreciation permanent is a landmark decision—a tax strategy elevated from temporary incentive to foundational planning tool. It deeply enhances cash flow and after-tax returns for real estate investors. For anyone buying, improving, or planning property moves in the coming years, this is more than a technicality. It’s a strategic game-changer.
